The breakdown of the American political system, pointing to a new and better future

Introduction: This is the second in a series of dashed off speculative opinions. Normal procedure on the FM website for these topics would be 3 thousand word posts, supported by dozens of links. I dont’ have the time to finish them, and too many of these outlines have accumulated in my drafts file. Perhaps these will spark useful debate and research among this site’s readers.

The American system is breaking up. The more or less clear lines dividing left from right have blurred into incoherence. This opens the way for new solutions offering real reform.

Contents

Does anti-war mean liberal? Does pro-war mean conservative?

America tests liberal and conservative solutions

What comes next?

For more information from the FM site and an Afterword

(1) Does anti-war mean liberal? Does pro-war mean conservative?

Our wars most clearly show the collapse of the traditional divisions.

Hillary Clinton, painted as radical leftist by many conservatives, vehemently supports our current wars. President Obama, also painted as a radical by the right, strongly supports the Af-Pak war.

Patrick Buchanan and William Lind (longtime head of the Center for Cultural Conservatism) oppose our current wars. As does Andrew Bacevich (Colonel, US Army, retired, bibliography here), who describes himself as a Catholic conservative and publishes in American Conservative magazine.

For a clear and provocative analysis of what went wrong with America during the past decade, see “System Failure“, Christopher Hayes, The Nation, 1 February 2010 — We (the voters) performed a simple test. Hayes describes the results which are not what either side expected. Excerpt:

There is a widespread consensus that the decade we’ve just brought to a close was singularly disastrous for the country: the list of scandals, crises and crimes is so long that events that in another context would stand out as genuine lowlights — Enron and Arthur Andersen’s collapse, the 2003 Northeast blackout, the unsolved(!) anthrax attacks — are mere afterthoughts.

American progressives were the first to identify that something was deeply wrong with the direction the country was heading in and the first to provide a working hypothesis for the cause: George W. Bush. During the initial wave of antiwar mobilization, in 2002, much of the ire focused on Bush himself. But as the decade stretched on, the causal account of the country’s problems grew outward in concentric circles: from Bush to his administration (most significantly, Cheney) to the Republican Party to–finally (and not inaccurately) — the entire project of conservative governance.

As much of the country came to share some version of this view (tenuously, but share it they did), the result was a series of Democratic electoral sweeps and a generation of Americans, the Millennials, with more liberal views than any of their elder cohorts. But it always seemed possible that the sheer reactionary insanity of the Bush administration would have a conservatizing effect on the American polity. Because things had gone so wrong, it was a more than natural reaction to long for the good old days; the Clinton years, characterized by deregulation and bubbles, seemed tantalizingly placid and prosperous in retrospect. The atavistic imperialism of the Bush administration had a way of making the pre-Bush foreign policy of soft imperialism and subtle bullying look positively saintly.

Toward the end of the decade, as the establishment definitively rebuked Bush and sought to distance itself from his failures, the big-tent center-left coalition took on an influential constituency — the Colin Powells and Warren Buffetts — who didn’t want reform so much as they wanted restoration. This was reflected in a strange internal tension in the Obama campaign rhetoric that simultaneously promised both: change you can believe in and, as Obama said at a March 2008 appearance in Pennsylvania, a foreign policy that is “actually a return to the traditional bipartisan realistic policy of George Bush’s father.”

If the working hypothesis that bound this unwieldy coalition together–independents, most liberals and the Washington establishment–was that the nation’s troubles were chiefly caused by the occupants of the White House, then this past year has served as a kind of natural experiment. We changed the independent variable (the party and people in power) and can observe the results. It is hard, I think, to come to any conclusion but that the former hypothesis was insufficient

So what, exactly, is it that ails us?

… There’s a word for a governing philosophy that fuses the power of government and large corporations as a means of providing services and keeping the wheels of industry greased, and it’s a word that has begun to pop up among critics of everything from the TARP bailout to healthcare to cap and trade: corporatism. Since corporatism often merges the worst parts of Big Government and Big Business, it’s an ideal target for both the left and right. The ultimate corporatist moment, the bailout, was initially voted down in the House by an odd-bedfellows coalition of Progressive Caucus members and right-wingers.

In the wake of the healthcare sausage-making, writers from Tim Carney on the right (author of the provocative Obamanomics) and Glenn Greenwald on the left have attacked the bill as the latest incarnation of corporatism, a system they see as the true enemy. There is even some talk among activists of a grand left-right populist coalition coming together to depose the entrenched interests that hold sway in Washington. Jane Hamsher of Firedoglake touted her work with libertarians to oppose Ben Bernanke, more AIG bailouts and the Senate healthcare bill (“What we agree on: both parties are working against the interests of the public, the only difference is in the messaging”); David McKalip, the tea-party doctor who got into trouble for forwarding an image of Obama with a bone through his nose, wrote an open letter to the netroots proposing that they join him in fighting the “real enemy,” the “unholy corporate/government cabal that will control your healthcare.”

I don’t think that coalition is going to emerge in any meaningful form. The right’s anger is born largely of identity-based alienation, a fear of socialism (whatever that means nowadays) and an age-old Bircher suspicion that “they” are trying to screw “us.” Even in its most sophisticated forms, such as in Carney’s Obamanomics, the basic right-wing argument against corporatism embraces a kind of fatalism about government that assumes it will always devolve into a rat’s nest of rent seekers and cronies and therefore should be kept as small as possible.

But the progressive critics hold that we can and should do better. The Medicare Part D model is a terrible way of running a government for a number of reasons. First, and most practical, it’s expensive. When paying off protection rackets is the price of passing legislation, you have to come up with a lot more money. Allowing Medicare to negotiate drug prices would have saved the government as much as $30 billion a year. The strong public option would, according to the Congressional Budget Office, save $85 billion over ten years. Once everyone has laid claim to their vig, you soon find yourself tapped out.

The second problem is that this form of governance degrades the integrity of the state. Historian Tony Judt made this point eloquently in his October 19 lecture “What Is Living and What Is Dead in Social Democracy.” Delegating fundamental state activities to private actors, he said, “discredits the state.” Instead of a straightforward relationship between citizen and state, we have a mediated one that has the potential to perversely feed the anti-statist arguments of the right as the state becomes, in Judt’s words, “represented in the popular mind by a grasping private profiteer.”

But the corporatism on display in Washington is itself a symptom of a broader social illness that I noted above, a democracy that is pitched precariously on the tipping point of oligarchy. In an oligarchy, the only way to get change is to convince the oligarchs that it is in their interest — and increasingly, that’s the only kind of change we can get.

The Bush years have brought us to the brink of disaster. The Left has little to offer, as seen in this history of Obama’s years in Chicago: “Chicago’s Real Crime Story“, Heather MacDonald, City Journal, Winter 2010 — “Why decades of community organizing haven’t stemmed the city’s youth violence” (a powerful article, I recommend reading it).

(3) What comes next?

Nothing concentrates the mind like the sight of the gallows. We have tried both sides of the conventional spectrum and found no true reform. As described in The first step to reforming America (the final version), insanity is repeating the same mistakes and expecting different results. We need new solutions. Recognition of our current dead end is the first step to real reform.

Marxists confront such situation with optimism. As he said in his preface to A Contribution to the Critique of Political Economy (1859):

Mankind thus inevitably sets itself only such tasks as it is able to solve, since closer examination will always show that the problem itself arises only when the material conditions for its solution are already present or at least in the course of formation.

For those of us worshiping at a different church — or none at all — this economic determinism gives us no help. I recommend faith in us, in our collective strength. We have overcome more difficult challenges in our past, and will confront still more difficult challenges in our future. Today we merely lack confidence in each other, and faith in the American project. The solutions are out there; we merely need reach for them.

(4a) For more information from the FM site

To read other articles about these things, see the FM reference page on the right side menu bar, including About the FM website page. Of esp relevance to this topic:

32 thoughts on “The breakdown of the American political system, pointing to a new and better future”

Very nice summary. I am one conservative who has learned his lesson about supporting wars. Other conservatives I interact with are also seeing the light. I don’t know how much of this new found opposition is a thinly disguised anti-Obama-ism.

In fact, due to our fiscal situation, I find myself anti-everything that costs money and deeply skeptical of government schemes. I guess that makes me a traditional conservative…

The sooner conservatives realize Bush led us down the primrose path (no matter how good his intentions may have been, the road to hell…) the sooner the movement can regain credibility.
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.FM reply: I agree with your first paragraph. But I suggest that your second paragraph reflects conservative propaganda more than anything seen in history or economic theory:

“due to our fiscal situation, I find myself anti-everything that costs money and deeply skeptical of government schemes”

Said during the worst downturn (both domestic and global) since the 1930’s, this represents a return to Andrew Mellon’s liquidationist economics. “Liquidate capital. Liquidate labor. Purge the rottenness from the system.” If we have a 2nd leg down to this recession, Republicans will have the opportunity to test your theory. I suspect the result will be the same as Hoover’s test — 50 years in which the American people keep conservatives far from the levers of power. Some knowledge forgotten must be regained at great cost.

“Even in its most sophisticated forms … the basic right-wing argument against corporatism embraces a kind of fatalism about government that assumes it will always devolve into a rat’s nest of rent seekers and cronies and therefore should be kept as small as possible.”

I tend to think of myself as a libertarian eschewing the right-left paradigms which is why I like FM – he thinks independently even though I don’t always agree with him. I have to say however, that if the above statement truly describes the nature of the “right wing” then I am FAR to the right. I don’t just think that government will always devolve into “a rat’s nest of rent seekers and cronies” but I think it will (HAS) devolved into a giant killing machine.

I guess this is the crux of our differences. Call me a triumph of conservative propaganda if you will but I see myself as a veteran of one of America’s imperial wars and an (admittedly poor and amateur) student of history. As such, I’m hard-pressed to see where the optimism about government comes from. So shoot me.
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.FM reply: I have explicitly not said anything remotely condemning such expressions of conservative thought. This post suggests that the conventional expressions of both left and right have failed, and the lines between them have blurred. The former does not discredit the core beliefs of either side. The latter can be seen by the mixture of ideologies among those supporting our wars — and opposing them. Another example: the large fraction of voters who are socially liberal but economically conservative. I believe this shows that we’re a transitional phase, before left and right each redefine themselves. Butterflies emerging from their cocoon, reborn and revitalized.

“see where the optimism about government comes from”

Look as other nations. The Swiss and Singapore, or example. We need not attempt to become them, but it is nuts to believe we cannot learn something from them. “Arrogant belief in American exceptionalism” would make a sad epitaph for America.

Had Hoover actually had the sense and clout to follow through on Mellon’s recommendation, we probably wouldn’t have remembered the 30s as a “Great Depression” today. A heck of a crack or reset perhaps, but then it would be over. With less time for protectionism, crackpot class warfare, economic and political centralization and other madness to take root.

In ’29, as now, there was more debt around than could be serviced, backed by collateral now worth less than the debt written against it. And plenty of people in positions and occupations dependent on exponential debt increases to remain economically viable. Problem was, as now, that at the end of every long inflationary bubble, the rich and influential are disproportionately drawn from those debt increase dependents, as that’s what a bubble does; benefit those with the easiest access to, and greatest appetite for, credit. And so Mellon’s wise and tough sounding words, resulted in about as much action as those of every other well spoken politician’s, when faced with the Wall Street Welfare Queens of his age. Hence, 1931 and onward deficit developments looks a bit like our 2008 and on ones, with ’31 being our ’08, ’32 our ’09, and then FDR came along and kept them at ’32 levels almost constantly (except ’38, which may well be the extent to which we can continue before a bond market revolt), until comparisons become meaningless with the advent of WW2.

I do feel the conservative side is ideologically breaking up more than the liberal one. The ideological left is still fairly consistent in their descriptions and prescriptions. Inconsistencies between ideology and action, seem to be the result of realizing, that in order to win elections in Karl Rove’s center right America, they have to run centrist/sellout candidates.

On the right, the divisions strike me as more fundamental. The GOP counts as members both people who genuinely believe the government can be a force for good, and those more skeptical of government in general. For decades, the ones in power have been of the former group. Hence, debates have been about “cultural” issues. Like whether schools should feature prayer or sex ed, or whether we need more cops and prisons, or teachers and shrinks.

But the GOP also has a wing much less sanguine about government. And these guys are the ones that seem to be gaining ground these days. Fatalists, Hayes calls them in your excerpt. Paleocons / Ron Paul Republicans / Traditional Conservatives / Anti War Conservatives they seem to prefer, themselves. And it is this latter group that is ascendant and, I suspect in some parts of the country, already so big that there is no way around them for those seeking power on a GOP ticket.
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.FM reply: Can you cite any historians or economists (please, no journalists and such) who believe that
(a) …Hoover did not follow Mellon’s advice during the critical 1929-1930 period AND
(b) …the course of the Great Depression if he had done so?

By mid-1931 both Mellon and Hoover had burned through their political capital, totally discredited by events. In 1931 and esp 1932 Hoover initiated a mini-New Deal, but on too small a scale to have significant effect. In any case, no nation recovered from the New Deal without going off the gold standard and initiating stimulus efforts — which fact in itself discredits your faux history. For a visual of this see here.

#2: “I guess this is the crux of our differences. Call me a triumph of conservative propaganda if you will but I see myself as a veteran of one of America’s imperial wars and an (admittedly poor and amateur) student of history. As such, I’m hard-pressed to see where the optimism about government comes from. So shoot me.”

We do not need: “more government” nor “less government”. We MUST have GOOD government! I could list about 50 things that Good Gov has provided for us but won’t. Suffice it to say that if we did NOT have good government in the past we would not have:
Good clean water
Good clean air
And Pintos would still be exploding and Corvairs would still be killing people.

Won’t shoot you but implore you to cast aside the easy ideology and consider.

From FM’s post: “Marxists confront such situation with optimism. As he said in his preface to A Contribution to the Critique of Political Economy (1859):

“Mankind thus inevitably sets itself only such tasks as it is able to solve, since closer examination will always show that the problem itself arises only when the material conditions for its solution are already present or at least in the course of formation.”

This broad statement about “what Marxists think about it”, based on something Marx said once, is a little too facile for me. Marxists or Socialists are a pretty wide-ranging bunch. The ones I talk to don’t seem that optimistic lately, rather, they seem scared just like everyone else.
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.FM reply: It was an illustration. To its believers (if there any left) Marxism is a science that shows how the future will inevitably develop through historical determinism. That is the basis of their optimism, and the basis of Marx’s quote.

A quote from the article that’s particularly relevant to me: “Broadmoor luxury resort chief executive Steve Bartolin wrote an open letter asking why the city spends $89,000 per employee, when his enterprise has a similar number of workers and spends only $24,000 on each.”

The concept of paying employees a living wage is anathema to the business class in America. I know Fabius has written about the problems that will occur as the government becomes the preferred employer of the middle class. It’s worth considering what will happen if the ‘lean government’ types get their way and the last place people can find middle class jobs is destroyed.

Another relevant quote from Marx:

“The lower strata of the middle class — the small tradespeople, shopkeepers, and retired tradesmen generally, the handicraftsmen and peasants — all these sink gradually into the proletariat, partly because their diminutive capital does not suffice for the scale on which Modern Industry is carried on, and is swamped in the competition with the large capitalists, partly because their specialized skill is rendered worthless by new methods of production. Thus, the proletariat is recruited from all classes of the population.”
— The Communist Manifesto, Chapter 1.

At issue is not the abstract notion of whether “government” is good or bad but rather whether a nation state that encompasses an arbitrary swath of the North American continent provides the best – or even a workable – perspective and framework to solve the problems of the 21st century.

I think not because most important problems are either too large or too small to be so addressed. The problems FM describes essentially are symptoms of this basic misfit of the template of approaching issues from a national perspective.

Perhaps another good question is to what extent, if any, is the corporation a rational economic organization in today’s context. I am beginning to ponder this issue but currently have no clear perspectives.

“Look as other nations. The Swiss and Singapore, or example. We need not attempt to become them, but it is nuts to believe we cannot learn something from them.”

The lesson I learned is racial and ethnic homogeny goes a long way toward consensus in government. But I’m not sure it’s a lesson I’d be comfortable applying to the United States.
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.FM reply: That’s an odd lesson to learn from Switzerland, a confederation of 4 ethnic groups, with 4 official languages: Romansh, Italian, French, and German.

Shifting default risk onto the government is all well and good until your government defaults. Taking a bridge loan might be a good way to keep your fridge stocked, assuming you can put the nutritional benefits to work for you by finding a better source of income. A big assumption.

Unfortuneately I can’t find where Matt Taibbi ever wrote an article expressing my ideas, so I can’t reply too often.

I have worked in American(and a little foreign) politics for almost 40 years.At different times I have worked with both major parties. You are absolutely right in that we are basically now in an oligarchial system(and the oligarch’s are none to damn competent either).

Whether your politcial philosphy is of the left or right. At the end of the day we the people don’t count for spit. Some would say the real leadership cadre, which matters in this country is as small as 100. Others place it up to maybe 2,500 souls(mostly lost). The 2,500 sounds about right to me.

Look at Bushie Boy and Obama. When you strip away all their political BS rhetoric. They are basically, just face men for opposite sides of the same oligarchical coin. The current economic disaster’s, war disaster’s and fiscal disaster. They are all decidedly counter to any coherent and generally accepted frame work of what conservative political management should create.

Yet these disasters were created and inflicted on the Republic by “supposedly” conservative(BS)”Georgie” Bush and “Darth Vader”Cheney. God only knows what Obama and his Merry Band will inflict on us in the next 7 years.CLUES FOR YOU LEFTIES:Afghanistan and those”mean ole” Israeli’s. At the end of the day,you’re probably not going to be very happy either.IE you’ve been had also, it’s just a little early in Obama’s game for it to become painfully obvious to you.

Now some would say,”well, what we have is a system for avoiding extremeism from either side of the political spectrum”. And that statement probably had a degree of truth at one time. But what the system has now deteriorated into, is a system of decadent political, financial, and big corporate oligarchs. Who are systematically looting our nation,as they transfer their allegiance to some vague concept of globalism(whatever the hell that is),(Can you say Goldman Sachs. The mega larceny they have just conducted in plain sight, and they are untouchable. But hey,they did pay for every politican in sight, fair and square).

Most of these elites are now psychologically,emotionally, and financially slowly tip toeing out America’s back door into “globalism land”. As they leave the rest of us holding the bag. Is it 70 BC or 370 AD?
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.FM reply: It’s neither 70 BC or 370 AD, despite the similaties (to the former, I see few to the latter). We will learn from both examples, and the others lessons history presents, to rebuild America into a stronger nation in the 21st than it was in the 19th and 20th centuries. We have everything necessary to do this, but lack only the will.

“Creating new jobs and giving to the whole system a new breath of life; nothing has ever been devised in our history which has done more for … “the common run of men and women.” Some of the reactionary economists urged that we should allow the liquidation to take its course until we had found bottom…. We determined that we would not follow the advice of the bitter-end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction.”

If economists impress you more than non PC former presidents, here’s Rothbard:

” If government wishes to alleviate, rather than aggravate, a depression, its only valid course is laissez-faire – to leave the economy alone. Only if there is no interference, direct or threatened, with prices, wage rates, and business liquidation will the necessary adjustment proceed with smooth dispatch.”

Both quotes, as well as great article, from an even greater book, at “Herbert Hoover’s Depression” by Murray N. Rothbard.
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.FM reply: Faux quotes to support faux history. Murray Rothbard is notorious for inventing quotes to support his wild theories. The quote from Hoover is pastiche from several campaign speeches in 1932, when he boasts of his mini-New-Deal — since running on “My inactivity I caused the Great Depression” seemed unlikely to work. For more on this origins of this alleged quote see “What Did Hoover Say, and When Did He Say It? Unraveling Rothbard’s Mysterious Footnote“, Bryan Caplan, Library of Economics and Liberty, 3 November 2008. Caplan is Assoc Prof of Economics at George Mason U and an adjunct scholar of the Cato Institute. As I said, Hoover’s reliance on Mellon’s laissez-faire policies during the critical 1929-1930 period were decisive. His interventionist programs in the last 2 years of his term were too little, too late.

Rather than Hoover’s desperate campaign speeches, I suggest relying on “Memoirs”. Mellon, as Secretary of the Treasury, had…

… only one formula: liquidate labor, liquidate stocks, liquidate the farmers, and liquidate real estate…. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.

atheist: I hate having to explain myself. Usually because it means my clever phrase wasn’t nearly as clever as it seemed when I wrote it, which is never a pleasant feeling. But since I was too gnomic, basically I was wondering how Marx squared his ideas of inevitable social progress with the fact that sometimes advanced societies do collapse. Easter Island was just an example where the collapse was both nearly total, and there were no external factors driving it.
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.FM reply: First, Marx was speaking about the destiny of humanity, not each little fragment of it. Second the “ecological collapse” of Easter Island is a fable. The historical record shows that it shared the fate of many islands following contact with Europe: depopulation from disease and slave raids. The eco-fable is more enjoyable, and useful too! For more about this see “From Genocide to Ecocide: The Rape of Rapa Nui“, Benny Peiser (Wikipedia), Energy and Environment, volume 16 No. 3&4 2005. Abstract:

The ‘decline and fall’ of Easter Island and its alleged self-destruction has become the poster child of a new environmentalist historiography, a school of thought that goes hand-in-hand with predictions of environmental disaster. Why did this exceptional civilisation crumble? What drove its population to extinction? These are some of the key questions Jared Diamond endeavours to answer in his new book Collapse: How Societies Choose to Fail or Survive. According to Diamond, the people of Easter Island destroyed their forest, degraded the island’s topsoil, wiped out their plants and drove their animals to extinction. As a result of this selfinflicted environmental devastation, its complex society collapsed, descending into civil war, cannibalism and self-destruction. While his theory of ecocide has become almost paradigmatic in environmental circles, a dark and gory secret hangs over the premise of Easter Island’s self-destruction: an actual genocide terminated Rapa Nui’s indigenous populace and its culture. Diamond, however, ignores and fails to address the true reasons behind Rapa Nui’s collapse. Why has he turned the victims of cultural and physical extermination into the perpetrators of their own demise? This paper is a first attempt to address this disquieting quandary. It describes the foundation of Diamond’s environmental revisionism and explains why it does not hold up to scientific scrutiny.

In my own humble opinion, the US could do a lot worse than become basically West Switzerland. Armed to the teeth with not much of a standing army, beholden to nobody, not a member of the UN, peaceable trade with those who would trade peaceably. I could live with that.

I was a “neocon”, but now have decided that while the Iraq project was probably a worthwhile exercise if only to give it a good chance to work, it’s time to pack up and go home. And by that I mean maybe 90% of our overseas military should just call it a day and come home. Obviously we’ve proven beyond a shadow of a doubt that our efforts are not appreciated. Why kill ourselves any longer? We gave it the best we had.

So let’s just bring everybody home, cut our spending to a sane level, and work on just getting ourselves out of the hole we’re in.

FM: “The Swiss and Singapore, or example. We need not attempt to become them, but it is nuts to believe we cannot learn something from them.”

This can be interpreted as indicating the possibility that we could somehow “become them”, but need not try. Nor does it state the obvious differences that would make such an action impossible.
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.FM reply: Winner of weirdest comment of the thread. My comment “indicates” no such thing.

Then your comment was trivial.
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.FM reply: It is never trivial to say that “American exceptionism” is harmful when it blocks us from learning lessons from other nations. The pending health care disaster is a powerful example, our inability to accomplish what every other developed nation did decades ago: build a system which provides an adequate level of health care to all at an affordable cost. Nations have accomplished this in many ways, with varying costs and levels of success — almost all doing this far better than us.

I personally believe that it is never trivial to say the Rosary, but neither is this the issue to which I referred. My original comment concerned what you suggested could be learned and applied from Switzerland or Singapore. If you now merely state that we can learn “something”, then jolly good. I am not convinced that “American exceptionism” is that which is preventing a health-care overall constituted of a grab bag of foreign ideas.
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.FM reply: I don’t see that any of your comments asked “what could be learned and applied from Switzerland or Singapore.” However, here are a two obvious things:
* how to organize a high-growth society under adverse circumstances, mixing social stability with a high degree of personal liberty.
* how to operate well-funded and efficient social services (esp retirement and health care) in a multi-ethnic society.

@KFofB
You surely have the strangest debating style I’ve ever seen. Fabius is saying the United States can and should learn lessons from other countries but for some odd reasons have chosen not to do so in areas like health care. One of the biggest reasons is the idea of “American Exceptionalism” in which many Americans think we’re the greatest country ever and therefore have nothing to learn from foreigners. Personally, I also believe part of the problem is the shocking levels of ignorance Americans display about the rest of the world. Many Americans simply don’t know how other governments are run and therefore cannot draw any lessons from them.

Fabius: I’ve read Diamond’s book. He discusses the slave raids and destruction of the indigenous culture that occurred post European contact. He also discusses evidence for deforestation pre-contact, and evidence for the rather traumatic collapse of the civilization that had erected the Moai statues, including the deliberate destruction of the Moai monuments themselves that occured pre-contact and the changing compositon of garbage middens indicating how the diet had changed as the residents of the island became unable to build ocean going canoes and lost access to many staple species of fish. Neither of these points are so much as mentioned in the article you linked.

That said, even if I accept your linked article completely uncritically, it still doesn’t change the fundamental point that sometimes societies fail, they encounter problems they cannot solve or they create problems for themselves they cannot solve. I could have made the same point about the Anasazi, the Sumerians, Great Zimbabwe, or the Mayans.
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.FM reply: I agree (and believe Marx would also) with your fundamental point, which (as you note) has a depressing number of examples in history. The note about Easter Island was, relative to this, a trviia point.

“He discusses the slave raids and destruction of the indigenous culture that occurred post European contact”

Yes, but that’s not the story he tells. Right at the start (page 20) he paints a picture which is largely wrong:

“Our first case study from the past, the history of Easter Island, is as close as we can get to a “pure” ecological collapse, in this case due to total deforestation that led to war, overthrow of the elite and the famous stone statues, and a massive population die-off. As far as we know, Easter’s Polynesian society remained isolated remained isolated after its inital founding, so that Easter’s trajectory was uninfluence by either enemies or friends.”

“even if I accept your linked article completely uncritically”

Don’t! I believe the eco-fable has little support among scientists who have studied the history. Note I gave 2 other citations, and could have given many more.

My guess would be that exceptionalism is most prevalent in the segment of the US population that does not vote and would in no way hinder an overhaul of the healthcare system (for example).

If (we) are to learn lessons from other countries, we best take care that the lessons we learn are applicable to our situation.

I agree that there are unacceptable levels of ignorance, and before we study foreign governing procedures, we would do better to learn our own first. I am not personally “on-board” with the plan that we can will improvement into existence, or the notion that “awareness” of a problem will ultimately lead to its solution.
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.FM reply: IMO the healthcare debate disproved you first sentence. The focus was almost exclusively on the Canadian and UK systems. Esp the latter, which is by many measures among the worst in the developed world. The far superior systems in Europe, for example, were largely ignored. And almost all of the participants were voters, I suspect — in the debate via newspapers, Internet, TV, and radio.

“before we study foreign governing procedures, we would do better to learn our own first”

I don’t know what the second clause means. But other nations conduct what are, from our perspective, experiments. It seems insane to me that we would make changes without studying what others have done.

” What’s going on? Rothbard’s critics will accuse him of misrepresenting the facts about Hoover. If that’s what you think, check out the links; you will be shocked by the statism of Hoover’s rhetoric compared to his laissez-faire reputation. Rothbard’s got truthiness on his side. And in any case, if Rothbard wanted to twist Hoover’s words, why would his endnote admit that the Hoover quote was a composite? Without that anomalous footnote, I never would have thought to double-check his sources. In the end, my best guess is that Rothbard just got sloppy – he assembled some Hoover howlers during the research stage, remembered that they came from more than one source, but then failed to double-check his notes once he actually got down to writing.”

So, Rothbard had truthiness on his side, but his quoting was a bit sloppy (Thanks for the link, btw). And therefore, somehow, Hoover pursued a Mellon inspired policy of scorched earth liquidation, darnit! Regardless of whether he brags about disregarding advice that he do so or not? Sometimes I do wonder if you’re not a bit too fond of arguinig, just for the sake of it…..

Now, forget about Rothbard, Hoover and Mellon for awhile. They’re all dead, whatever they may have meant and said. Argument-by-appeal-to-supposed-authority is best left to my-dad-can-beat-up-your-dad playground skirmishes anyway. Instead, look at outstanding debt over the relevant period. Here’s some relevant graphs Steve Keen posted: “Can the USA debt-spend its way out?“, 28 November 2008.

If you look at the bottom graph in the post, the one showing both private, public and combined debt to gdp, where’s all that aggregate liquidation in the early 30s?

(For anyone still following this thread: the ratio spike post ’29 is more likely due to GDP falling than to debt increasing in absolute terms, but still… Not much early 30s liquidation as far as I can see. On the other hand, once we get to the late 40s, early 50s, enough debt have been (slowly) liquidated to get back to non bubbly levels. Which, I surmise, not coincidentally coincides with the start of renewed economic expansion… But that’s just opinion, of course)
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.FM reply: This is like debating someone from the Flat Earth society. You wallow in this fiction, when 3 minutes with Wikipedia or any encylopedia would give you the facts. Please don’t post more until you’ve read some reliable reference work. I’ll give one more round for the sake of others reading this.

“Rothbard had truthiness on his side”

This is important, and accounts for your ignorance about these things. You like people to lie to you, so long as the story is pleasing. That’s sad, but beyond anyone’s ability to help. As I have stated several times, Hoover was liquidationist in the first half of his term. The massive failure of his policies forced a change, the mini-New Deal. Too little, too late.

“where’s all that aggregate liquidation in the early 30s?”

This shows the extent of your indoctrination, that you cannot see the facts in front of your eyes. The graph does not show debt, but debt/gdp. GDP dropped by 27% from August 1929 March 1933, so of course debt/gdp rose. Find a graph of private sector debt during that period and you’ll see the liquidation.

As for the Keen article, hae any dumber articles have been written by economists in the past 2 years?

“Reports that the USA government’s total financial commitments from the financial crisis now top US$5 trillion raise the obvious question “Can they afford it?”. The answer isn’t obvious. Some economists, from a range of schools of economic thought, argue that the government sector (lumping the Treasury and the Federal Reserve together) has a limitless capacity to pay debt as a consequence of its status (especially since the US dollar is still the world’s reserve currency.”

It’s probably true, in the sense that over the course of time and space some economists believe that a currency should be backed by wooden nickles or cow chips. Of course, since this is a nutty stawman arguement, he doesn’t mention any name of these “some economists.”

FM: “It’s neither 70 BC or 370 AD, despite the similaties (to the former, I see few to the latter). We will learn from both examples, and the others lessons history presents, to rebuild America into a stronger nation in the 21st than it was in the 19th and 20th centuries. We have everything necessary to do this, but lack only the will.”

For individuals, nation states, and cultures the power to will is everything. The Post Modern West in general appears to be losing the will to dominate and in the end that means survival.

I believe the Romans amongst others eventually ran into the lack of will issue (probably about the same time they put Gays in the Legions). Should we hope for the “bad ass” Tyrant on a white horse. Maybe the Tyrant would have the will we seem to be lacking. It has happened several times before in history.
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.FM reply: I believe they Roman people lost the will to govern themselves during the late Republic era. After that it was just a question of who would seize the reins.

“probably about the same time they put Gays in the Legions”

I’m sure you’re joking, but it raises the question of what would happen if some conservatives insulted the fighting power and spirit of homosexuals — with a time-traveling unit from the Sacred Band of Thebes at the next table. Those fools would die quickly if the Thebans were in a good mood.

It does not seem to me that Hoover was an liquidationist, or the paragon of classical free market economics. In fact he seems a lot like Bush and Obama in terms of his policies.

“We have defended millions from the tragic result of droughts. We have mobilized a vast expansion of public construction to make work for the unemployed. We fought the battle to balance the budget. We have defended the country from being forced off the gold standard, with its crushing effect upon all who might be in debt. We have battled to provide a supply of credits to merchants and farmers and industries. We have fought to retard falling prices. We have struggled to save homes and farms from foreclosure of mortgages, battled to save millions of depositors and borrowers from the ruin caused by the failure of banks, fought to assure the safety of millions of policyholders from failure of their insurance companies, and fought to save commerce and employment from the failure of railways.”
— Hoover’s Address at the Coliseum in Des Moines, 4 October 1932 (soruce)

Looking at the above, I’m not sure how you can support the idea that Hoover followed Mellon’s advice at all, by his own admission he has done the opposite.

“In the midst of this hurricane the Republican administration kept a cool head, and it rejected every counsel of weakness and cowardice. Some of the reactionary economists urged that we should allow the liquidation to take its course until it had found its own bottom.”

FM, Hoover tried free market policies at the beginning of his term and then quickly went in the opposite effect after about a year and a half. Why is it that you and others feel it necessary to give him only one year or so to prove himself. If the country was in so much debt, it would obviously take a great deal of time for all that debt to be taken care of, indeed one could expect things to get much worse before they got better. It may have been that the economy would have recovered much more rapidly once that “rot” was purged from the system and the slate wiped clean.

The more important thing to consider was that it was not then, and perhaps is not now, politically expedient to swallow the hard medicine necessary to really start fresh. In that context, FDR can be seen as successful politically even if his policies may have actually made things worse in the long run. The libertarians argue for a purity in economics that is as impossible to implement as everyone turning the other cheek and loving their neighbor completely. The progressives on the other hand wrongly conclude that because people are not willing to abide by the principles of economics to their most efficient extreme, that somehow those forces have no bearing or are irrelevant. They do have bearing and they will hurt us.

What FDR realized though is that the hurt of following deficit spending is not as bad as the hurt of having an irrational populist movement destroy the very fabric of society and replace it with something worse.

Ultimately though the right political moves in the 1930s are not necessarily right political moves today. You don’t need to liquidate everything to get rid of debt, all you need to do is restructure it to reflect current values. What people who support the bailouts seem to miss is that the values fell because they were unrealistic in the first place and not based on market fundamentals. This fall in value is only a problem when you end up owing more than the house is worth and that’s why we needed government supported and mandated restructuring. Indeed this could have occurred across all sectors and we would have all had a fresh start without forcing everyone to become poor and destitute in the process.

The cancellation of debt is an old tradition, going back to the Babylonians. Unfortunately, like everything else, we moderns are too “smart” to follow the advice of the ancients. ilee: Notes on Debt Cancellation
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.FM reply: I note your inability — like others advocating this bizarre theory — to spend 2 minutes finding evidence, and prefer to just make stuff up. Esp fun is quoting yet another campaign speece from 1932 (which you of course don’t date) — as if Hoover would run on the “Liquidationists” platform.

FM: “I’m sure you’re joking, but it raises the question of what would happen if some conservatives insulted the fighting power and spirit of homosexuals — with a time-traveling unit from the Sacred Band of Thebes at the next table. Those fools would die quickly if the Thebans were in a good mood.”

FM — Yes, I’m just having a bit of a wry chuckle. But your reply does raise the question,of what would have been the final outcome for the “Sacred Band of Prancing Thebans”? If that old “whoremonger extraordinarie and arch conservative” Alexander the Great hadn’t wiped them out by making sure his Merry Band of Macedonians were equipped with “LONGER SPEARS”?

I suppose Mr Gates and Admiral Mullen (both perfect examples of our dissipated elites) probably have plans for a special American unit of Homosexual Warriors…probaly going to call them “The Pink Berets”.

FM, My point is only that Hoover was never a hard-core “liberationist”. Where I agree with you is that he steadily ramped up his interventionism as time went by.

Additionally, your interpretation of the Great Depression and Hoovers hand in it does not seem to factor in more recent evidence. Hoover met with industry leaders back in 1929 and asked them to keep wages high and even to increase them over the next few years. (source) This is said to have caused more problems than it solved and it goes against the notion Hoover was completely free market in his approach. There is more though, because yes I have spent more than “2 minutes finding evidence” Hoovers signing of the Smoot-Hawley Tariff Act in 1930 created huge tariffs on foreign goods and started an international trade war that made everyone worse off.

Yet for some reason you count all of Hoovers policies as “too little, too late” as if he was simply not bold enough in his approach. This is an important issue to discuss because we as a people need to know what policies are effective and which are not. You seem to imply there is no debate on the causes of the great depression and thus tow the Krugman line of needing massive deficit spending in order to keep the economy going. Of course even he now sees that there will be no way to pay off our debt. (“The next great crisis: America’s debt“, Fortune, 5 June 2009). We may have been able to spend our way out of debt in the past, but the exponential economic growth necessary to do that simply is not possible. We will have to do what Nixon did in the 70s and find a creative way to default on our debt to the rest of the world.

It may be the case that we need to intervene, but lets not take anything as economic gospel and lets have a substantive debate instead of simply dismissing the other side as advocating “bizarre” theories.
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.FM reply: I’ve really lost interest in this faux history. Governments since the beginning of history have levied taxes and tarriffs, and asked businenss leaders to follow desired policies. If that is “interventionist” then every US President and UK Prime Minister for the past 2 centuries has been interventionist. Even Washington, with his microscopic government (by our standards). So the term is meaningless, by your definition. The rest of your comment is just speculation, as these things are in fact a lot more complex than your too simple economics suggests.

“that Hoover was never a hard-core “liberationist”. ”We can as easily say FDR was not a “hard-core” interventionist. Using an absolute standard and comparing it to real world events is sophomoric.

Thanks for the clip. Humor is always appreciated and needed. You have however,just previewed a probable example of a future(maybe current) US Secretary of Defense. The man in charge of keeping you and your family safe from a very,very mean world. Just ask the 3,000 who died on 9-11.

Fabius is starting to increasing favor the “thought-ending cliche”
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.FM reply: Can you provide an example from the posts on this website? Or, not as useful, from the comments (where haste and brevity make short-cuts more common)? I recommend that you use quotes when making such strong accusations; otherwise they appear like fluff. A literary way of ending a discussion by saying “And you too!”

A thought-terminating cliché is a commonly used phrase, sometimes passing as folk wisdom, used to quell cognitive dissonance. Though the phrase in and of itself may be valid in certain contexts, its application as a means of dismissing dissent or justifying fallacious logic is what makes it thought-terminating. The term was popularized by Robert Jay Lifton in his book Thought Reform and the Psychology of Totalism. Lifton said, “The language of the totalist environment is characterized by the thought-terminating cliché. The most far-reaching and complex of human problems are compressed into brief, highly reductive, definitive-sounding phrases, easily memorized and easily expressed. These become the start and finish of any ideological analysis.”

FM,
Bryan Caplan, in the article you referenced, notes that while Rothbard quotes from 4 separate Hoover speeches, he only attributes 2 in the footnotes. Caplan in no way implies this technical slip up changes the meaning of Hoover’s words. That’s what the “truthiness” remark is about. If this thread was about refereeing Rothbard’s skill, diligence and success at source quotation, Rothbard screwed up. But that’s not what this thread is about, is it? Nothing in Caplan’s article implies that Hoover thought of himself as a liquidationist. And certainly not that I somehow like being lied to, wherever that came from…

If you look at the graph Keen posted, you will note the debt to GDP ratio rising by about half in the early 30s. During the same period, as you noted, GDP fell by about a third. Here in numerateville 3/2 times 2/3 tends to come out to somewhere around 1. And please go ahead and note the posted graph is about as lacking in detail as can be for the period in question. It looks like the hard data points are around ’29 and ’32, which, of course leave room for the straight line between the two not in fact being all that straight. Perhaps a disproportionate chunk of the debt by ’32 was incurred after Hoover “saw the light”, or whatever. The graph doesn’t really say.

And I have no doubt “some” debt was liquidated in the early 30s. it would be pretty stunning to have GDP fall like a rock, without at the same time witnessing some absolute liquidation. But a bit of liquidation during a huge downturn does not evidence an explicitly “liquidationist” policy, does it? My contention is, if Hoover acted as tough as the Mellon quote you keep referring to, debt should have fallen much quicker.

Now, let’s look at the components of Hoovers so called liquidationist policy, to get a better handle of what it actually entailed. Start with the deficit. Look at this table:

Increased receipts and outlays, and constant deficit in ’30; increased outlays against declining receipts, hence rising deficits, in ’31 and ’32. So, all that liquidationist zeal amounts to one year of fairly steady aggregate fiscal policy, perhaps with a slight shift in the mix from private to public spending.

Then look at the discount rate for the period. Couldn’t find a nice graph or table, but paragraph 3 and 4 from this article by Robert Murphy,

“This changed after the stock-market crash. On November 1, just a few days following Black Monday and Black Tuesday — when the market dropped almost 13 percent and then almost 12 percent back to back — the New York Fed began cutting its rate. It had been charging banks 6 percent going into the Crash, and then a few days later it slashed by a full percentage point.
Then, over the next few years, the New York Fed periodically cut rates down to a record low of 1 ½ percent by May 1931. It held the rate there until October 1931, when it began hiking to stem a gold outflow caused by Great Britain’s abandonment of the gold standard the month before. (Worldwide investors feared the United States would follow suit, so they started dumping their dollars while the American gold window was still open.)”

I know this is your blog, and that one of the privileges of having one’s very own blog is being able to have “liquidationist policy” mean whatever one wants it to mean. But any reader still following this, ought to recognize that in this case, “liquidationist policy” seems to mean little more than:

One single year of unchanged fiscal policy accompanied by a sharp lowering of interest rates, presided over by a President who repeatedly claimed to be anything but a liquidationist.

And that the end result of the policy seems to have been not very much actual net liquidation at all.

Not what immediately springs to my mind when I hear the term liquidationist policy. But again, on your blog, liquidationist can mean whatever you want it to mean.

And as for your attempt at slighting Steve Keen; If you have never heard an economist claim America can fund any deficit by monetization, you obviously haven’t been privy to much in the way of prospectuses and sales pitches from various investment and project peddlers. Whenever, over the last two decades, there has been a brouhaha over the deficit, this particular example of American exceptionalism is noted. Inevitably in an “analyses” by an economist on the selling party’s staff. And you’ll see the same economists popping up on CNBC, Fox Business, as well as on various investment web sites, spewing their oh-so impartial “analyses”. In case you haven’t noticed, it’s a lot easier to pitch some financial product for protecting against inflation, than against deflation.